Greenfield & Brownfield
Where do you start?
Friends,
I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.
Now accepting keynotes for 23Q3-24Q1
Every year, I create three main presentations. For 2023, they are:
Delusions of determinism: Why planning for success leads to failure
Regression toward the meme: Why modern leadership continues to fall into old traps
Under pressure: Retail in a new financial era
If you want to book me for your event, workshop, or corporate speaking slot, just send me an email. To make sure I am available, however, please do so at your earliest convenience; my schedule is filling up fast. More information can be found here.
A couple of updates before we go-go
All quiet on the Western front. Once more, unto the newsletter, dear friends.
Item of the week
In complexity, there is a counterintuitive phenomenon called the slower is faster effect (SIF). In short, it occurs when a system performs worse when its components try to be better; a moderate individual efficiency actually leads to a better systemic performance. Carlos Gershenson and Dirk Helbing explain why in this highly interesting paper, and put thinking by people such as Frederick Winslow Taylor in a new light.
In the above cases, the system can have at least two different states: an efficient and an inefficient one. Unfortunately, the efficient state is unstable, such that the system will tend to end up in the inefficient state. … To avoid the undesired outcome, the system components must stay sufficiently away from the instability point, which requires them to be somewhat slower than they could be, but as a reward they will be able to sustain a relatively high speed for a long time. If they go faster, the efficient state breaks down and causes another one that is typically slower for everyone.
Moving on.
Where strategy begins
It is not how you finish, but where you start
One of the major themes of this newsletter has since its inception been what Benjamin Brewster so aptly summarized in The Yale Literary Review, volume 47, October 1881 – June 1882: in theory, there is no difference between theory and practice, but in practice, there is.
Anyone with working experience knows it only too well. Academic texts tend to assume universality, or at least generic implementation, of their teachings. It is perhaps inevitable; in order to reach scale, be it among students or in the market, findings have to have broad implications. There is nothing wrong with that per se – it depends on what the finding is, what form the argument takes, and how one uses it. Where issues arise is when the theory in question is viewed to be a final revelation; a conversational endpoint.
Praxis, by contrast, uses theory as a starting point. The reason, as Dave Snowden likes to point out, is that without sound theory, you cannot scale practice. Or to put it differently, without understanding the why, you cannot scale the how (as true for any strategy as it is for those asked to execute it).
But even when, as praxis dictates, theoretic knowledge is utilized to “merely” lay the foundation, one must be careful not to assume that the ground beneath it is flat. It is a very easy mistake to make. Common practice in strategy formulation is to approach the task with two questions firmly in mind: 1) where do we want to go, and 2) how do we get there? Yet neither requires an understanding of how the firm got to where it is in the first place, so it is predictably omitted.
I call this the greenfield fallacy. For those unfamiliar with the term, a greenfield architectural project is one that lacks constraints imposed by prior work upon the building site in question; one may start from scratch. A brownfield architectural project, conversely, carries constraints related to the existing state of the building site. It might for example be contaminated or have existing structures, such as disused factories and outmoded office buildings, that need to be torn down or modified before the project can move forward. This, of course, means larger risks. Volatile organic compounds (VOCs) may be exposed while digging and re-enter the atmosphere, with potentially dire consequences for the environment and workers alike. There may also be noise pollution, dangerous particles from equipment and machinery emissions, and so on.
Unless one is helping a founder create a completely new firm, every strategic undertaking will be a brownfield project to some degree. There will always be processes already in place, investment lag effects, path-dependency effects, dark constraints, risks, and more – all of which will have a decisive influence not just over what we do, but also what we can do beyond the measurable capabilities at our disposal. And yes, this is why so-called pivots so often fail (along with the fact that one tends to pivot into a weaker competitive position caused by a lack of relevant experience).
In traditional strategic management theory in general, and strategic planning theory in particular, this is rarely mentioned. Instead, it is implicitly assumed that that one can do what one sets out to do, at least within the confines of a budget. Diagnosis is the tool with which the thinkers outline the problem, the plan is their proposed solution, and every doer should act in accordance with their wisdom and will. It is, of course, a remnant of Taylorism.
In practice, employees carry their collective past, and its weight may be such that they are prevented from moving. Consequently, a significantly more pragmatic approach is to acknowledge the messy present and describe it, so as to enable an understanding of the day-to-day and what one might change. In technical terms, this may be expressed as the eschewing of an established ideal future and an attempt to close the gap in favor of a definition of the dispositional state of the organizational system and identification of how it might be constrained to move in a wanted direction. In entirely colloquially terms: start with where you are, not where you want to finish.
I would never suggest that all strategic planners assume a green field, because I know that is not the case. But even when they acknowledge mess, the goal of their work is to escape it and reach idealized, crystalline end-states. In reality, there will always be messy presents; there will always be problems; there will always be uncertainty. The emergent patters that we observe may never truly be finished, meaning that for certain strategic challenges, there may be no solution to find.
Strategy in praxis is thus about limiting an unspecified (we cannot know how many; there is no defined sample space) number of problems before they arise and managing the ones that nonetheless do. We need to be forward-facing, certainly, so that we know that we are heading in the right direction at the right speed, even as we are crossing the river by touching the stones. Importantly, however, that is not the same thing as staring at the horizon and ignoring where you are – because you might just walk off a cliff.
Or a building site.
Until next time, have the loveliest of weekends.
Onwards and upwards,
JP
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